More and more, staffing companies are playing a key role in the American economy. Staffing firms such as Allegis, Adecco, Randstad, Kelly Service, and Manpower, are commonly known as temp agencies and provide temporary labor to a wide range of firms in all industries. According to a Department of Commerce report, temporary employment accounted for more than 2 percent of total U.S. employment in 2015.
Annual Totals for Staffing and Recruiting Industry
Source: American Staffing Association, Staffing Industry Analysts Inc., U.S. Department of Commerce
The staffing industry is now at an all-time high, with nearly 16 million Americans working as a temp or contractor for a staffing agency in 2015. These temporary placements have resulted in approximately $120 billion in revenue.
Recent Drop in Temp Employment and its Impact on the Staffing Industry
Temporary workers are a demographic that makes up the bread and butter of the U.S. staffing agency, and this is a demographic that has been diminishing in the current labor market. According to the Bureau of Labor Statistics (BLS), temporary-help employment has had a net decline of 41,800 jobs so far in 2016. Mark Marcon, a senior research analyst at Robert Baird, says that the drop in temporary workers is largely due to the cool-down in GDP growth, since employers tend to first turn to temp workers who are easy to add and subtract to an organization’s workforce.
“It’s kind of a weird brew in which some employers have pulled back on the number of employees they are bringing on staff, and there’s also a dynamic of pickiness over where some people are willing to work.” ~Mark Marcon, Senior Research Analyst at Robert Baird
This declining temp employment and lowered unemployment rate may lead to diminishing profits for staffing companies. For example, Robert Half, a leading staffing firm for finance and accounting positions in the U.S., saw its shares fall 18 percent in 2015 as the unemployment rate declined from 5.6% in December 2014 to 5 percent in December 2015.
“Profits in the staffing industry are similar to those in the grocery industry, you’re taking pennies on the dollar, low single digits. So it’s not an extraordinarily profitable business, but there is high volume.” ~Steve Berchem, Chief Operating Officer at the American Staffing Association